How can I use Leave Without Pay in Australia?

Leave without pay

Leave Without Pay (LWOP) refers to an arrangement where an employee is granted time off work without receiving their regular wages.

Although LWOP is not automatically an entitlement under Australian employment law, employers may approve it in specific circumstances based on individual or business needs. This flexibility is particularly important in dynamic workplaces like contact centres, where staffing levels must often be balanced against employees’ personal obligations.

Understanding the nuances of LWOP is essential for both employees and employers to ensure compliance with workplace laws and to manage absences effectively.

While LWOP is relevant across all industries, including contact centres, many organisations in Australia permit employees to take personal leave without pay (often abbreviated as LWOP on payslips) for various reasons, which we outline below.

Common ‘Leave Without Pay’ reasons

Employers have the discretion to grant LWOP for various reasons.

Below are some of the most common situations where employees request unpaid leave:

  • Extended holidays – Employees may request LWOP when they have exhausted their annual leave but wish to extend their time away.
  • Health and recovery – Employees recovering from a serious illness or attending healthcare appointments may need unpaid leave after using all personal or sick leave entitlements.
  • Study or professional development – LWOP can support employees pursuing education or training opportunities that enhance their skills and benefit the organisation.
  • Parental support – New parents may request additional unpaid leave beyond their parental leave entitlements to support their family or bond with their child.
  • Career breaks – Employees might take unpaid leave for sabbaticals, extended travel, or other personal milestones.
  • COVID-19 isolation or travel disruptions – During the pandemic, LWOP became common for employees in government-mandated isolation or those unable to return from overseas.

It’s essential for employers to evaluate these requests on a case-by-case basis and consider the potential impact on their business.

LWOP and Australian Employment Law

Under the Fair Work Act 2009, there is no general entitlement to unpaid leave.

However, certain unpaid leave types are protected under the National Employment Standards (NES), including:

  1. Compassionate Leave
    Employees can take unpaid compassionate leave if an immediate family or household member is gravely ill, injured, or has passed away.
  2. Unpaid Carer’s Leave
    Employees may take unpaid carer’s leave when a family or household member requires care due to illness, injury, or an emergency.
  3. Unpaid Parental Leave
    Employees are entitled to unpaid leave for the birth or adoption of a child, allowing them to establish caregiving routines while safeguarding job security.
  4. Community Service Leave
    Employees participating in jury duty or volunteering for emergency management services are entitled to unpaid leave.

Beyond these entitlements, granting LWOP is generally at the discretion of the employer.

Employee Rights During LWOP

Employees on LWOP should be aware of how it impacts their rights:

  • Public Holidays: Employees are not entitled to payment for public holidays that fall during LWOP.
  • Annual Leave Accrual: LWOP pauses the accrual of annual leave and personal leave entitlements.
  • Continuity of Service: Most LWOP periods do not break employment continuity, meaning the employee’s service period is maintained. However, LWOP may not count towards service for calculating redundancy or unfair dismissal entitlements.
  • Superannuation Contributions: Employers are not required to make superannuation contributions during LWOP, but employees may choose to make voluntary contributions.

Can Employers Refuse LWOP Requests?

Sorry to be the bearer of bad news, but yes, employers generally have the right to refuse LWOP requests unless the leave falls under specific NES entitlements.

Common considerations for employers include:

  • The operational impact of the employee’s absence.
  • The length and timing of the requested leave.
  • The employee’s work history and reason for the leave.

To maintain consistency, employers should establish clear LWOP policies outlining the circumstances under which such requests may be approved.

Can Employers ENFORCE Leave Without Pay?

In rare cases, employers can require employees to take LWOP, known as a stand down. This can occur when:

  1. The employment contract explicitly allows stand-downs.
  2. A trade union agreement supports the practice.
  3. A significant business disruption outside the employer’s control (e.g., natural disaster or equipment failure) prevents work.

Stand-downs should always be temporary and well-documented. Employers are encouraged to seek legal advice before enforcing unpaid leave.

Alternatives to LWOP

While LWOP provides flexibility, employers and employees may consider alternative arrangements:

  • Flexible Work Options: Adjustments to work hours, remote work, or job sharing may meet employee needs without requiring unpaid leave.
  • Accrued Leave: Employees with annual or personal leave balances can use these entitlements before requesting LWOP.
  • Leave in Advance: Some modern awards allow employees to take annual leave before it has accrued, with repayment clauses in case of termination.

These alternatives ensure minimal disruption to business operations while supporting employee needs.

Benefits of Approving LWOP

Granting LWOP can benefit both the employer and employee:

  • Improved Wellbeing: Time off can help employees manage stress and return to work with renewed focus.
  • Retention: Supporting employees during challenging times can enhance loyalty and reduce turnover.
  • Skill Development: Employees may use LWOP for training or education, ultimately benefiting the organisation.
  • Cultural Alignment: A flexible approach to LWOP demonstrates a supportive workplace culture, improving engagement and morale.

Key Takeaways

Leave Without Pay is a flexible option for employees requiring time off beyond their paid entitlements. However, it requires careful consideration by employers to ensure business continuity and fairness across the workforce.

Establishing clear LWOP policies and exploring alternatives can help organisations support their employees while maintaining operational efficiency.

For more information, visit the Fair Work Ombudsman or consult your award or agreement.

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